The books you read in the initial phase of your stock market journey create a great impact on your career. Investing means committing money, time, or other resources into financial plans, property, or a commercial venture with plans to expect future benefits.
Before starting your journey, you must study carefully and understand and do deep research on it because if you, don't you will lose your time and money.
These are the 5 books that you must read to start your journey:
1) Rich Dad Poor Dad
If you don't know anything about investing, you must go with the book Rich Dad Poor Dad by Robert Kiyosaki. If you are a beginner, this is the best-recommended book for you.
Robert Kiyosaki tells many things in this book, like how money should maintain, how to put money to work, and such mistakes: due to this poor always remain poor. He also said that if poor people follow all these things, they can be rich quickly.
This book teaches you many learning:
- Rich People don't work for money work for them. Rich people don't buy luxuries like a house or car on loans as poor people invest.
- Focus on the mindset you need to be better with money.
- One should be financially educated as every school in every country doesn't include financial education as a subject.
2) Dhandho Investor
Have you ever think how rich people invest their money or how do they think about investing money?
This is the that Mohnish Pabrai had asked who is a world-famous value investor and a businessman. In this book, he talks about his investing style which he called as dhando style. He talks about how he finds the companies that are undervalued and bets on them very heavily using an asymmetric technique which is with low risk and high reward. He use a method called 'Heads I win, Tails I did not lose much' to invest. Quotes from this book:
- "Entrepreneurs are great at dealing with uncertainty and also very good at minimizing risks. That is the classic, great entrepreneur".
- "You don’t make money when you buy stocks. And you don’t make money when you sell stocks. You make money by waiting".
- "You Can’t Accurately Predict the Future".
3) Market Wizards
Market wizards written by Jack D. Schwager had created a significant impact on the market. He talks about how the worst thing about a trader is beginner luck. If you got success in the beginning phase of your trading career then it might harm your ego when you suffer loss. It also tells you that use only that strategy which suits you the best. Different strategies in the market vary from trader to trader so, it is required to use only those strategies that suit you best.
The book is a compilation of 17 interviews. 16 interviews of top traders and one interview with a psychologist who focuses on helping professional traders. A few of the learnings from this book are:
- Always Manage Risk: One should know how potentially they can lose and plan their downside.
- Market Require Time: When we try to interview different traders all of them have one answer in common the market requires time. If you want to enter into the trading market for 1 or 2 years then it can't work, You need to give at least 4-5 years to be a good trader.
- Be 100% Committed to the decision you make.
4) Intelligent Investor
This book is written by Benjamin Graham in 1934. The best part of this book is the way it is written. This book tells us how people can start investing in the stock market and analyze companies or their pricing. This book is called the bible of a value investor. It means that this book is beneficial for those who deeply study companies. This book also refers to value investing which means buying a company that is lower than its intrinsic value with a sufficient margin of safety. When you do value investing then you not might be looking for overnight returns as it is a long-term investment.
5) The Most Important Things
Howard Marks the author of this book said that the most important thing is a risk. He is one of the most successful investors and co-founder and co-chairman of Oaktree Capital Management. In his investing journey, he met different people and noticed quite a few things we need to understand to become a successful investors. This book covers many physiological facts and helps us in understanding, recognize and control risk. The actual idea the book display is how to understand current market situations and become a successful investor. A few of the learnings of this book are:
- There are old investors, and there are bold investors, but there are no old bold investors.
- Investment success doesn’t come from “buying good things,” but rather from “buying things well.
- We have to practice defensive investing since many of the outcomes are likely to go against us. It’s more important to ensure survival under negative outcomes than it is to guarantee maximum returns under favorable ones.